Partner Article

WNS Announces Fourth Quarter and Full Year Earnings

WNS (Holdings) Limited (WNS) (NYSE: WNS), a leading provider of global Business Process Management (BPM) services, today announced results for the fiscal 2017 fourth quarter and full year ended March 31, 2017.

Highlights – Fiscal 2017 Fourth Quarter:

GAAP Financials

Revenue of $159.4 million, up 11.7% from $142.6 million in Q4 of last year and up 9.6% from $145.4 million last quarter Profit/(Loss) of ($5.0) million, compared to $15.9 million in Q4 of last year and $18.0 million last quarter Diluted earnings/(loss) per ADS of ($0.10), compared to $0.30 in Q4 of last year and $0.35 last quarter

Non-GAAP Financial Measures*

Revenue less repair payments of $154.1 million, up 13.9% from $135.3 million in Q4 of last year and up 10.2% from $139.8 million last quarter Adjusted Net Income (ANI) of $24.0 million, compared to $23.4 million in Q4 of last year and $25.2 million last quarter Adjusted diluted earnings per ADS of $0.46, compared to $0.44 in Q4 of last year and $0.49 last quarter

Other Metrics

Added 36 new clients in the quarter (including clients of acquired businesses), expanded 10 existing relationships Days sales outstanding (DSO) at 29 days Global headcount of 33,968 as of March 31, 2017

Revenue in the fourth quarter was $159.4 million, representing an 11.7% increase versus Q4 of last year and a 9.6% increase from the previous quarter. Revenue less repair payments* in the fourth quarter was $154.1 million, an increase of 13.9% year-over-year and 10.2% sequentially. Excluding exchange rate impacts, constant currency revenue less repair payments* in the fiscal fourth quarter grew 19.1% versus Q4 of last year and 9.9% sequentially. Year-over-year, fiscal Q4 revenue was impacted by currency movements net of hedging, primarily related to depreciation in the British pound against the US dollar. This headwind was more than offset by broad-based revenue growth across key verticals from both new and existing clients. Year-over-year revenue also increased as a result of the company’s acquisitions of Value Edge, Denali and HealthHelp. Sequentially, revenue growth was driven by acquisitions, improved farming activities, new client wins, and one-time revenue benefits from project extensions, gain sharing and client transition work.

WNS recorded an operating loss margin in the fourth quarter of (2.0%), as compared to operating profit margin of 13.2% in Q4 of last year and 14.2% in the previous quarter. In Q4, WNS recorded a non-recurring $21.7 million charge for goodwill impairment relating to the AutoClaims business. The company believes this impairment charge was necessary given developments in Q4 including the proposed regulatory changes in the legal services market which will result in WNS exiting this part of the business, and the loss of business due to contract reductions and cancellations in the traditional repair business. On a year-over-year basis, margin reductions were driven by goodwill impairment, acquisition-related expenses, the impact of our annual wage increases, and currency movements net of hedging. These headwinds were partially offset by a step-down in amortization of intangible asset expense and increased operating leverage from higher volumes. Sequentially, margins were pressured by goodwill impairment, acquisition-related expenses, hiring in advance of large deal ramps, and currency net of hedging which more than offset benefits from the step-down in amortization of intangible asset expense and increased operating leverage on higher volumes.

Fourth quarter adjusted operating margin* was 18.1%, versus 22.0% in Q4 of last year and 21.3% last quarter. On both a year-over-year and sequential basis, adjusted operating margin* reduced for the same reasons discussed for GAAP operating margin, with the exception of impacts relating to goodwill impairment and amortization of intangible asset expense. The goodwill impairment charge has been excluded from adjusted operating margin* and adjusted net income (ANI)* as it is non-recurring in nature.

In the fiscal fourth quarter, WNS recorded a loss of ($5.0) million, as compared to profits of $15.9 million in Q4 of last year and $18.0 million in the previous quarter. Adjusted net income (ANI)* in Q4 was $24.0 million, up $0.6 million as compared to Q4 of last year and down $1.2 million from the previous quarter.

From a balance sheet perspective, WNS ended Q4 with $182.2 million in cash and investments and $116.7 million of debt. In the fourth quarter, the company generated $30.7 million in cash from operations, had $7.4 million in capital expenditures and spent $117.8 million on acquisitions. Days sales outstanding were 29 days, as compared to 28 days in Q4 of last year and 30 days reported in the previous quarter.

“Our business continues to perform well, as evidenced by Q4 constant currency revenue growth of 19.1%, healthy adjusted operating margins and strong adjusted diluted earnings per share. We also acquired two new strategic businesses in the fourth quarter, with Denali enhancing our high-end procurement capabilities, and HealthHelp providing us with a technology-led, analytics-driven offering in care management,” said Keshav Murugesh, WNS’ Chief Executive Officer. “Overall, we are pleased with our fiscal 2017 performance, including constant currency revenue growth of 15.8%, adjusted operating margins of 19.4% and adjusted earnings per diluted share of $1.74. WNS also completed three tuck-in acquisitions and repurchased 2.2 million shares of stock during the year.

“Entering fiscal 2018, we are excited about WNS’ strategic positioning and business momentum. Our clients’ businesses are becoming increasingly complex and competitive, necessitating changes to how they approach their respective markets. WNS is helping clients deal with business disruption by delivering the right combination of domain expertise, analytics, automation, digital capabilities and global process expertise. We will continue to target industry leading financial performance and generating increased value for all of our key stakeholders.”

This was posted in Bdaily's Members' News section by WNS Global Services .